Becoming a landlord is an attractive prospect for a lot of people. It’s often a worthwhile way to invest and to have a regular stream of income. However, being a landlord isn’t for everyone, and there are plenty of people who run properties who probably shouldn’t. If you’re thinking of becoming a landlord, you need to take into account a variety of factors that could influence how successful you are. It’s important to consider not just whether you’re going to make a profit, but also whether you have the capacity to be a responsible landlord who sticks to the law. Here are some of the things you should think about before buying that first property.
Finding the Time
Before you start thinking about money or anything else, it’s worth considering whether you have the time to be a landlord. If you want to manage a property or even several properties yourself, you need to be available when your tenants need you. No matter what type of property you own, your tenants will have requirements both according to the law and what they might expect from you more informally. If your tenants have an emergency in the middle of the day, will you be able to take the time to fix it? Can you spare the time to get quotes from a plumber during your usual day because they need someone to come out ASAP?
Of course, it is possible to have someone else manage your property for you. You can use a property manager to handle it all, from finding tenants to taking care of repairs and maintenance. However, that doesn’t mean you can completely step back and not take care of anything. You will still need to be available to give your approval on some things, although you can control how involved you are.
Can You Make Enough Money?
The thought of owning property might have you seeing piles of cash flash before your eyes. However, much of the time, owning property isn’t going to mean you’re rolling in money. The best way to make more money is usually to build a property portfolio, so you have a number of investments to profit from. When you first start out as a landlord, you need to think about whether you can make enough money to make it worth it. Remember that you’ll need to spend money on maintenance and repairs, as well as things like safety checks. When a tenant moves out, you might need to redecorate or change the locks. As well as any planned expenses, there could always be unexpected costs. And if you’re planning on using a property manager, that’s going to cost you too.
What Sort of Property Would Work for You?
Another important consideration is what kind of landlord you might want to be. Some people eventually build a portfolio of various types of property, but you’re likely to start off with one particular type. You could invest in residential property, commercial property or perhaps something specialist like student property. One way to look at what’s available and think about what type of property might suit you is to search a site like Assetz Property. You can compare different properties to see what kind of return potential they have, as well as the financing options that might be available. You should consider the different responsibilities you might have with different types of property too.
Do You Have What It Takes to Expand?
Having one or perhaps two properties that you rent out is fairly common. However, if you have your sights set on making more money, you’re going to have to think about expanding your property portfolio. It’s difficult to make a lot from a single property, especially if you find that you have to do a lot of work on it. So if you’re thinking of becoming a landlord, what are the chances that you will be able to start expanding your portfolio in a few years? Rapid expansion will boost your earning potential, so having the money or financing available to do this will help you out.
Are You Responsible?
Property is a great investment, but it’s not usually just an asset you simply hold onto and leave empty (although some people do). When you rent out your property, it also makes it someone’s home or place of business. So you need to be prepared to act responsibly as a landlord, including following the law. Your primary reason for being a landlord might be that you want to make money, but you’re going it by providing somewhere to live or work for someone else. When other people are involved, you have to be able to treat them as you would want to be treated in their position.
Do You Like People?
Being a landlord can mean associating with a few different types of people. Firstly, there are your tenants, who could be families, students, business owners, or anyone else. Then you might also be dealing with professionals in the real estate market, bank and financing personnel, and perhaps other investors too. If working with people isn’t for you, you might not make the best landlord. It’s important to have the right connections and to be able to treat people kindly if you want to make it work.
What Can You Afford?
Of course, there’s also the money to think about. What can you afford to buy, and will be able to charge enough rent to pay your expenses? You’ll need to pay off your mortgage, as well as the costs of maintenance. Before you get to that, though, you need to be able to buy your first property. You’ll need to look at your options for financing to work out what you can afford. Perhaps you’re lucky enough to have enough cash funds, or you need to start looking at buy-to-let mortgages.
Being a landlord can be a great way to make money from an investment. However, it’s not for everyone, so you need to think carefully about whether it’s right for you.